Financial Tips

Financial Tips

Financial Tips

Test Your Knowledge of "See-Through" Trusts(Updated: 03/12/2018)

Treasury regulations permit naming a trust as the beneficiary of a retirement account. To qualify as a "see-through” trust, which permits post-death required minimum distributions (RMDs) to be "stretched” (i.e., calculated on the life expectancy of the oldest of the trust's underlying beneficiaries), which of the following requirements must be met?

The trust must be valid under state law.

The trust must be irrevocable or become irrevocable upon the death of the participant.

All beneficiaries of the trust must be individuals.

The beneficiaries must be identifiable from the trust instrument.

All of the above.

Answer: E

For a trust to be considered a qualified beneficiary of an IRA or other retirement plan, all of these requirements must be met. In addition, the appropriate documentation—which usually includes a copy of the trust—must be provided to the plan administrator within a specified amount of time. If these requirements are met, the tax-deferred status of an inherited IRA will be extended, and the beneficiaries will be permitted to stretch the RMDs over the life expectancy of the oldest beneficiary.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

We understand that it can be tricky navigating the world of personal finance. Everyone seems to have an opinion, and it can be hard to know what to believe. We created this series as a way to present and debunk some of the most common financial myths.

Fiction: If your parents want to age in place, their current home is the best option for them.

Fact: Even if living independently in a residential home is the plan, your parents’ current home may prove too costly to maintain or impractical to modify as their needs change. See if they would consider looking for housing where upkeep is less burdensome and where the layout and amenities are more accommodating. Moving to a new home may not have been the plan, but staying in a house that is inaccessible can be even more problematic.

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